THE FOREIGN EXCHANGE MANAGEMENT ACT, 1999 

_________ 

ARRANGEMENT OF SECTIONS 

__________ 

CHAPTER I 

PRELIMINARY 

SECTIONS 

1.  Short title, extent, application and commencement. 
2.  Definitions. 

CHAPTER II 

REGULATION AND MANAGEMENT OF FOREIGN EXCHANGE 

3.  Dealing in foreign exchange, etc. 
4.  Holding of foreign exchange, etc. 
5.  Current account transactions. 
6.  Capital account transactions. 
7.  Export of goods and services. 
8.  Realisation and repatriation of foreign exchange. 
9.  Exemption from realisation and repatriation in certain cases. 

CHAPTER III 

AUTHORISED PERSON 

10.  Authorised person. 
11.  Reserve Bank’s powers to issue directions to authorised person. 
12.  Power of Reserve Bank to inspect authorised person. 

CHAPTER IV 

CONTRAVENTION AND PENALTIES 

13.  Penalties. 
14.  Enforcement of the orders of Adjudicating Authority. 
14A. Power of recover arrears of penalty. 
15.  Power to compound contravention. 

CHAPTER V 

ADJUDICATION AND APPEAL 

16.  Appointment of Adjudicating Authority. 
17.  Appeal to Special Director (Appeals). 
18.  Appellate Tribunal. 
19.  Appeal to Appellate Tribunal. 
20.  [Omitted.] 
21.  Qualifications, for appointment of Special Director (Appeals). 
22.  [Omitted.] 
23.  Terms and Conditions of service Special Director (Appeals). 
24.  [Omitted.] 

1 

 
 
 
 
 
SECTIONS 

25.  [Omitted.] 
26.  [Omitted.] 
27.  Staff of Special Director (Appeals). 
28.  Procedure and powers of Appellate Tribunal and Special Director (Appeals). 
29.  [Omitted.] 
30.  [Omitted.] 
31.  [Omitted.] 
32.  Right  of  appellant  to  take  assistance  of  legal  practitioner  or  chartered  accountant  and  of 

Government, to appoint presenting officers. 
33.  Officers and employees etc., to be public servant. 
34.  Civil court not to have jurisdiction. 
35.  Appeal to High Court. 

CHAPTER VI 

DIRECTORATE OF ENFORCEMENT 

36.  Directorate of Enforcement. 
37.  Power of search, seizure, etc. 
 37A. Special provisions relating to assets held outside India in contravention of section 4. 
38.  Empowering other officers. 

CHAPTER VII 

MISCELLANEOUS 

39.  Presumption as to documents in certain cases. 
40.  Suspension of operation of this Act. 
41.  Power of Central Government to give directions. 
42.  Contravention by companies. 
43.  Death or insolvency in certain cases. 
44.  Bar of legal proceedings. 
44A. Powers of Reserve Bank not to apply to International Financial Services Centre. 
45.  Removal of difficulties. 
46.  Power to make rules. 
47.  Power to make regulations. 
48.  Rules and regulations to be laid before Parliament. 
49.  Repeal and saving. 

2 

 
 
 
 
 
 
 
 
 
 
 
THE FOREIGN EXCHANGE MANAGEMENT ACT, 1999 

 ACT NO. 42 OF 1999 

An  Act  to  consolidate  and  amend  the  law  relating  to  foreign  exchange  with  the  objective  of 
facilitating  external  trade  and  payments  and  for  promoting  the  orderly  development  and 
maintenance of foreign exchange market in India. 

BE it enacted by Parliament in the Fiftieth Year of the Republic of India as follows:— 

[29th December, 1999.]  

CHAPTER I 

PRELIMINARY 

1.  Short  title,  extent,  application  and  commencement.—(1)  This  Act  may  be  called  the  Foreign 

Exchange Management Act, 1999. 

(2) It extends to the whole of India.  

(3)  It  shall  also  apply  to  all  branches,  offices  and  agencies  outside  India  owned  or  controlled  by  a 
person resident in India and also to any contravention thereunder committed outside India by any person 
to whom this Act applies. 

(4)  It  shall  come  into  force  on  such  date1  as  the  Central  Government  may,  by  notification  in  the 

Official Gazette, appoint:  

Provided that different dates may be appointed for different provisions of this Act and any reference in 
any such provision to the commencement of this Act shall be construed as a reference to the coming into 
force of that provision.  

2. Definitions.—In this Act, unless the context otherwise requires,— 

(a) “Adjudicating Authority” means an officer authorised under sub-section (1) of section 16; 
2[(b) “Appellate Tribunal” means the Appellate Tribunal referred to in section 18;] 

 (c)  “authorised  person”  means  an  authorised  dealer,  money  changer,  off-shore  banking  unit  or 
any other person for the time being authorised under sub-section (1) of section 10 to deal in foreign 
exchange or foreign securities;  

3[(cc) “Authorised Officer” means an officer of the Directorate of Enforcement authorised by the 

Central Government under section 37A;] 

(d) “Bench” means a Bench of the Appellate Tribunal; 

(e) “capital account transaction” means a transaction which alters the assets or liabilities, including 
contingent  liabilities,  outside  India  of  persons  resident  in  India  or  assets  or  liabilities  in  India  of 
persons resident outside India, and includes transactions referred to in sub-section (3) of section 6; 

(f) “Chairperson” means the Chairperson of the Appellate Tribunal; 

(g) “chartered accountant” shall have the meaning assigned to it in clause (b) of sub-section (1) of 

section 2 of the Chartered Accountants Act, 1949 (38 of 1949); 

3[(gg)  “Competent  Authority”  means  the  Authority  appointed  by  the  Central  Government  under 

sub-section (2) of section 37A;] 

(h)  “currency”  includes  all  currency  notes,  postal  notes,  postal  orders,  money  orders,  cheques, 
drafts, travellers cheques, letters of credit, bills of exchange and promissory notes, credit cards or such 
other similar instruments, as may be notified by the Reserve Bank; 

1.  1st  June, 2000,  vide  notification  No.  G.S.R.  371(E),  dated  1st  May,  2000,  see  Gazette  of  India,  Extraordinary,  Part  II,   

sec. 3(i). 

        2. Subs. by Act 7 of 2017, s. 165, for clause (b) (w.e.f. 26-5-2017). 

3. Ins. by Act 20 of 2015, s. 138 (w.e.f. 9-9-2015). 

3 

 
                                                           
(i) “currency notes” means and includes cash in the form of coins and bank notes;  

(j) “current account transaction” means a transaction other than a capital account transaction and 

without prejudice to the generality of the foregoing such transaction includes,— 

(i)  payments  due  in  connection  with  foreign  trade,  other  current  business,  services,  and        

short-term banking and credit facilities in the ordinary course of business, 

(ii) payments due as interest on loans and as net income from investments,  

(iii) remittances for living expenses of parents, spouse and children residing abroad, and  

(iv) expenses in connection with foreign travel, education and medical care of parents, spouse 

and children;  

(k) “Director of Enforcement” means the Director of Enforcement appointed under sub-section (1) 

of section 36; 

(l) “export”, with its grammatical variations and cognate expressions, means— 

(i) the taking out of India to a place outside India any goods,  

(ii) provision of services from India to any person outside India;  

(m) “foreign currency” means any currency other than Indian currency; 

(n) “foreign exchange” means foreign currency and includes,— 

(i) deposits, credits and balances payable in any foreign currency,  

(ii) drafts, travellers cheques, letters of credit or bills of exchange, expressed or drawn in Indian 

currency but payable in any foreign currency,  

(iii) drafts, travellers cheques, letters of credit or bills of exchange drawn by banks, institutions 

or persons outside India, but payable in Indian currency;  

(o) “foreign security” means any security, in the form of shares, stocks, bonds, debentures or any 
other  instrument  denominated  or  expressed  in  foreign  currency  and  includes  securities  expressed  in 
foreign currency, but where redemption or any form of return such as interest or dividends is payable in 
Indian currency; 

(p)  “import”,  with  its  grammatical  variations  and  cognate  expressions,  means  bringing  into  India 

any goods or services;  

(q) “Indian currency” means currency which is expressed or drawn in Indian rupees but does not 
include special bank notes and special one rupee notes issued under section 28A of the Reserve Bank of 
India Act, 1934 (2 of 1934);  

(r)  “legal  practitioner”  shall  have  the  meaning  assigned  to  it  in  clause  (i)  of  sub-section  (1)  of 

section 2 of the Advocates Act, 1961 (25 of 1961); 

(s) “Member” means a Member of the Appellate Tribunal and includes the Chairperson thereof;  

(t)  “notify”  means  to  notify  in  the  Official  Gazette  and  the  expression  “notification”  shall  be 

construed accordingly;  

(u) “person” includes— 

(i) an individual,  

(ii) a Hindu undivided family,  

(iii) a company,  

(iv) a firm,  

(v) an association of persons or a body of individuals, whether incorporated or not,  

(vi) every artificial juridical person, not falling within any of the preceding sub-clauses, and  

(vii) any agency, office or branch owned or controlled by such person;  

4 

 
(v) “person resident in India” means— 

(i)  a  person  residing  in  India  for  more  than  one  hundred  and  eighty-two  days  during  the 

course of the preceding financial year but does not include— 

(A) a person who has gone out of India or who stays outside India, in either case— 

(a) for or on taking up employment outside India, or  

(b) for carrying on outside India a business or vocation outside India, or  

(c)  for  any  other  purpose,  in  such  circumstances  as  would  indicate  his  intention  to 

stay outside India for an uncertain period;  

(B) a person who has come to or stays in India, in either case, otherwise than— 

(a) for or on taking up employment in India, or  

(b) for carrying on in India a business or vocation in India, or  

(c)  for  any  other  purpose,  in  such  circumstances  as  would  indicate  his  intention  to 

stay in India for an uncertain period;  

(ii) any person or body corporate registered or incorporated in India,  

(iii)  an  office,  branch  or  agency  in  India  owned  or  controlled  by  a  person  resident  outside 

India,  

(iv)  an  office,  branch  or  agency  outside  India  owned  or  controlled  by  a  person  resident  in 

India;  

(w) “person resident outside India” means a person who is not resident in India;  

(x) “prescribed” means prescribed by rules made under this Act; 

(y) “repatriate to India” means bringing into India the realised foreign exchange and— 

(i)  the  selling  of  such  foreign  exchange  to  an  authorised  person  in  India  in  exchange  for 

rupees, or  

(ii)  the  holding  of  realised  amount  in  an  account  with  an  authorised  person  in  India  to  the 

extent notified by the Reserve Bank,  

and  includes  use  of  the  realised  amount  for  discharge  of  a  debt  or  liability  denominated  in  foreign 
exchange and the expression “repatriation” shall be construed accordingly;  

(z) “Reserve Bank” means the Reserve Bank of India constituted under sub-section (1) of section 3 

of the Reserve Bank of India Act, 1934 (2 of 1934);  

(za) “security” means shares, stocks, bonds and debentures, Government securities as defined in the 
Public Debt Act, 1944 (18 of 1944), savings certificates to which the Government Savings Certificates 
Act, 1959 (46 of 1959) applies, deposit receipts in respect of deposits of securities and units of the Unit 
Trust  of  India  established  under  sub-section  (1)  of  section  3  of  the  Unit  Trust  of  India  Act,  1963                       
(52 of 1963)* or of any mutual fund and includes certificates of title to securities, but does not include 
bills of exchange or promissory notes other than Government promissory notes or any other instruments 
which may be notified by the Reserve Bank as security for the purposes of this Act;  

(zb)  “service”  means  service  of  any  description  which  is  made  available  to  potential  users  and 
includes the provision of facilities in connection with banking, financing, insurance, medical assistance, 
legal  assistance,  chit  fund,  real  estate,  transport,  processing,  supply  of  electrical  or  other  energy, 
boarding or lodging or both, entertainment, amusement or the purveying of news or other information, 
but does not include the rendering of any service free of charge or under a contract of personal service ;  

(zc) “Special Director (Appeals)” means an officer appointed under 1[section 17];  

(zd) “specify” means to specify by regulations made under this Act and the expression “specified” 

shall be construed accordingly;  

1. Subs. by Act 7 of 2017, s.165, for “section 18” (w.e.f. 26-5-2017). 
*Now see the Unit Trust of India (transfer of Undertaking of Repeal) Act, 2002 (58 of 2002). 

5 

 
                                                           
(ze) “transfer” includes sale, purchase, exchange, mortgage, pledge, gift, loan or any other form of 

transfer of right, title, possession or lien.  

CHAPTER II 

REGULATION AND MANAGEMENT OF FOREIGN EXCHANGE 

3. Dealing in foreign exchange, etc.—Save as otherwise provided in this Act,  rules or regulations 

made thereunder, or with the general or special permission of the Reserve Bank, no person shall— 

(a)  deal  in  or  transfer  any  foreign  exchange  or  foreign  security  to  any  person  not  being  an 

authorised person;  

(b) make any payment to or for the credit of any person resident outside India in any manner;  

(c)  receive  otherwise  through  an  authorised  person,  any  payment  by  order  or  on  behalf  of  any 

person resident outside India in any manner. 

Explanation.—For the purpose of this clause, where any person in, or resident in, India receives 
any  payment  by  order  or  on  behalf  of  any  person  resident  outside  India  through  any  other  person 
(including an authorised person) without a corresponding inward remittance from any place outside 
India, then, such person shall be deemed to have received such payment otherwise than through an 
authorised person;  

(d)  enter  into  any  financial  transaction  in  India  as  consideration  for  or  in  association  with 

acquisition or creation or transfer of a right to acquire, any asset outside India by any person.  

Explanation.—For the purpose of this clause, “financial transaction” means making any payment 
to, or for the credit of any person, or receiving any payment for, by order or on behalf of any person, 
or  drawing,  issuing  or  negotiating  any  bill  of  exchange  or  promissory  note,  or  transferring  any 
security or acknowledging any debt.  

4. Holding of foreign exchange, etc.—Save as otherwise provided in this Act, no person resident in 
India  shall  acquire,  hold,  own,  possess  or  transfer  any  foreign  exchange,  foreign  security  or  any 
immovable property situated outside India.  

5.  Current  account  transactions.—Any  person  may  sell  or  draw  foreign  exchange  to  or  from  an 

authorised person if such sale or drawal is a current account transaction: 

Provided  that  the  Central Government  may,  in  public  interest  and  in  consultation  with  the  Reserve 

Bank, impose such reasonable restrictions for current account transactions as may be prescribed.  

6. Capital account transactions.—(1) Subject to the provisions of sub-section (2), any person may 

sell or draw foreign exchange to or from an authorised person for a capital account transaction.  

(2) The Reserve Bank may, in consultation with the Central Government, specify— 

1[(a)  any  class  or  classes  of  capital  account  transactions,  involving  debt instruments,  which are 

permissible;] 

 (b) the limit up to which foreign exchange shall be admissible for such transactions: 

2[(c) any conditions which may be placed on such transactions;]  

3[Provided that the Reserve Bank or the Central Government shall not impose any restrictions on 
the  drawal  of  foreign  exchange  for  payment  due  on  account  of  amortisation  of  loans  or  for 
depreciation of direct investments in the ordinary course of business.] 

1. Subs. by Act 20 of 2015, s. 139, for Clause (a) (w.e.f. 15-10-2019). 
2. Ins. by s. 139, ibid. (w.e.f. 15-10-2019).   
3. The Proviso subs. by s. 139, ibid. (w.e.f. 15-10-2019). 

6 

 
 
 
                                                           
1[(2A) The Central Government may, in consultation with the Reserve Bank, prescribe— 

(a) any class or classes of capital account transactions, not involving debt instruments, which are 

permissible; 

(b) the limit up to which foreign exchange shall be admissible for such transactions; and 

(c) any conditions which may be placed on such transactions.] 

2* 

* 

* 

* 

* 

(4) A person resident in India may hold, own, transfer or invest in foreign currency, foreign security 
or any immovable property situated outside India if such currency, security or property was acquired, held 
or owned by such person when he was resident outside India or inherited from a person who was resident 
outside India. 

(5) A person resident outside India may hold, own, transfer or invest in Indian currency, security or 
any  immovable  property  situated  in  India  if  such  currency,  security  or  property  was  acquired,  held  or 
owned  by  such  person  when  he  was  resident  in  India  or  inherited  from  a  person  who  was  resident  in 
India. 

(6) Without prejudice to the provisions of this section, the Reserve Bank may, by regulation, prohibit, 
restrict,  or  regulate  establishment  in  India  of  a  branch,  office  or  other  place  of  business  by  a  person 
resident  outside  India,  for  carrying  on  any  activity  relating  to  such  branch,  office  or  other  place  of 
business. 

3[(7)  For  the  purposes  of  this  section,  the  term  “debt  instruments”  shall  mean,  such  instruments  as 

may be determined by the Central Government in consultation with the Reserve Bank.] 

7. Export of goods and services.—(1) Every exporter of goods shall— 

(a) furnish to the Reserve Bank or to such other authority a declaration in such form and in such 
manner  as  may  be  specified,  containing  true  and  correct  material  particulars,  including  the  amount 
representing the full export value or, if the full export value of the goods is not ascertainable at the 
time  of  export,  the  value  which  the  exporter,  having  regard  to  the  prevailing  market  conditions, 
expects to receive on the sale of the goods in a market outside India;  

(b) furnish to the Reserve Bank such other information as may be required by the Reserve Bank 

for the purpose of ensuring the realisation of the export proceeds by such exporter.  

(2) The Reserve Bank may, for the purpose of ensuring that the full export value of the goods or such 
reduced  value  of  the  goods  as  the  Reserve  Bank  determines,  having  regard  to  the  prevailing  market 
conditions,  is  received  without  any  delay,  direct  any  exporter  to  comply  with  such  requirements  as  it 
deems fit. 

(3)  Every  exporter  of  services  shall  furnish  to  the  Reserve  Bank  or  to  such  other  authorities  a 
declaration in such form and in such manner as may be specified, containing the true and correct material 
particulars in relation to payment for such services. 

8.  Realisation  and  repatriation  of  foreign  exchange.—Save  as  otherwise  provided  in  this  Act, 
where any amount of foreign exchange is due or has accrued to any person resident in India, such person 
shall take all reasonable steps to realise and repatriate to India such foreign exchange within such period 
and in such manner as may be specified by the Reserve Bank.  

9.  Exemption  from  realisation  and  repatriation  in  certain  cases.—The  provisions  of  sections  4 

and 8 shall not apply to the following, namely:— 

(a) possession of foreign currency or foreign coins by any person up to such limit as the Reserve 

Bank may specify;  

1. Ins. by Act 20 of 2015, s. 139 (w.e.f. 15-10-2019). 
2. Sub-section (3) omitted by s. 139, ibid. (w.e.f. 15-10-2019). 
3. Ins. by s. 139, ibid. (w.e.f. 15-10-2019). 

7 

 
 
 
 
 
 
 
 
 
                                                           
(b) foreign currency account held or operated by such person or class of persons and the limit up 

to which the Reserve Bank may specify;  

(c) foreign exchange acquired or received before the 8th day of July, 1947 or any income arising 
or  accruing  thereon  which is  held outside  India  by  any  person in  pursuance  of  a  general  or  special 
permission granted by the Reserve Bank;  

(d) foreign exchange held by a person resident in India up to such limit as the Reserve Bank may 
specify, if such foreign exchange was acquired by way of gift or inheritance from a person referred to 
in clause (c), including any income arising therefrom;  

(e) foreign exchange acquired from employment, business, trade, vocation, services, honorarium, 
gifts, inheritance or any other legitimate means up to such limit as the Reserve Bank may specify; and 

(f) such other receipts in foreign exchange as the Reserve Bank may specify.  

CHAPTER III 

AUTHORISED PERSON 

10.  Authorised  person.—(1)  The  Reserve  Bank  may,  on  an  application  made  to  it  in  this  behalf, 
authorise  any  person  to  be  known  as  authorised  person  to  deal  in  foreign  exchange  or  in  foreign 
securities, as an authorised dealer, money changer or off-shore banking unit or in any other manner as it 
deems fit. 

(2) An authorisation under this section shall be in writing and shall be subject to the conditions laid 

down therein. 

(3) An authorisation granted under sub-section (1) may be revoked by the Reserve Bank at any time if 

the Reserve Bank is satisfied that— 

(a) it is in public interest so to do; or  

(b)  the  authorised  person  has  failed  to  comply  with  the  condition  subject  to  which  the 
authorisation was granted or has contravened any of the provisions of the Act or any rule, regulation, 
notification, direction or order made thereunder:  

Provided that no such authorisation shall be revoked on any ground referred to in clause (b) unless the 

authorised person has been given a reasonable opportunity of making a representation in the matter. 

(4)  An  authorised  person  shall,  in  all  his  dealings  in  foreign  exchange  or  foreign  security,  comply 
with such general or special directions or orders as the Reserve Bank may, from time to time, think fit to 
give, and, except with the previous permission of the Reserve Bank, an authorised person shall not engage 
in any transaction involving any foreign exchange or foreign security which is not in conformity with the 
terms of his authorisation under this section. 

(5) An authorised person shall, before undertaking any transaction in foreign exchange on behalf of 
any person, require that person to make such declaration and to give such information as will reasonably 
satisfy him that the transaction will not involve, and is not designed for the purpose of any contravention 
or evasion of the provisions of this Act or of any rule, regulation, notification, direction or order made 
thereunder,  and  where  the  said  person  refuses  to  comply  with  any  such  requirement  or  makes  only 
unsatisfactory  compliance  therewith,  the  authorised  person  shall  refuse  in  writing  to  undertake  the 
transaction  and  shall, if  he  has reason to  believe  that  any  such contravention or  evasion as aforesaid  is 
contemplated by the person, report the matter to the Reserve Bank. 

(6) Any person, other than an authorised person, who has acquired or purchased foreign exchange for 
any purpose mentioned in the declaration made by him to  authorised person under sub-section (5) does 
not use it for such purpose or does not surrender it to authorised person within the specified period or uses 
the foreign exchange so acquired or purchased for any other purpose for which purchase or acquisition of 
foreign exchange is not permissible under the provisions of the Act or the rules or regulations or direction 

8 

 
or order made thereunder shall be deemed to have committed contravention of the provisions of the Act 
for the purpose of this section. 

11. Reserve Bank’s powers to issue directions to authorised person.—(1) The Reserve Bank may, 
for  the  purpose  of  securing  compliance  with  the  provisions  of  this  Act  and  of  any  rules,  regulations, 
notifications  or  directions  made  thereunder,  give  to  the  authorised  persons  any  direction  in  regard  to 
making  of  payment  or  the  doing  or  desist  from  doing  any  act  relating  to  foreign  exchange  or  foreign 
security. 

(2) The Reserve Bank may, for the purpose of ensuring the compliance with the provisions of this Act 
or of any rule, regulation, notification, direction or order made thereunder, direct any authorised person to 
furnish such information, in such manner, as it deems fit. 

(3) Where any authorised person contravenes any direction given by the Reserve Bank under this Act 
or fails to file any return as directed by the Reserve Bank, the Reserve Bank may, after giving reasonable 
opportunity of being heard, impose on the authorised person a penalty which may extend to ten thousand 
rupees and in the case of continuing contravention with an additional penalty which may extend to two 
thousand rupees for every day during which such contravention continues.  

12.  Power  of  Reserve  Bank  to  inspect  authorised  person.—(1)  The  Reserve  Bank  may,  at  any 
time, cause an inspection to be made, by any officer of the Reserve Bank specially authorised in writing 
by  the  Reserve  Bank  in  this  behalf,  of  the  business  of  any  authorised person  as  may  appear to  it to  be 
necessary or expedient for the purpose of— 

(a) verifying the correctness of any statement, information or particulars furnished to the Reserve 

Bank;  

(b) obtaining any information or particulars which such authorised person has failed to furnish on 

being called upon to do so;  

(c) securing compliance with the provisions of this Act or of any rules, regulations, directions or 

orders made thereunder.  

 (2) It shall be the duty of every authorised person, and where such person is a company or a firm, 
every director, partner or other officer of such company or firm, as the case may be, to produce to any 
officer  making  an  inspection  under  sub-section  (1),  such  books,  accounts  and  other  documents  in  his 
custody  or  power  and  to  furnish  any  statement  or  information  relating  to  the  affairs  of  such  person, 
company or firm as the said officer may require within such time and in such manner as the said officer 
may direct.  

CHAPTER IV 

CONTRAVENTION AND PENALTIES 

13.  Penalties.—(1)  If  any  person  contravenes  any  provision  of  this  Act,  or  contravenes  any  rule, 
regulation, notification, direction or order issued in exercise of the powers under this Act, or contravenes 
any  condition  subject  to  which  an  authorisation  is  issued  by  the  Reserve  Bank,  he  shall,  upon 
adjudication,  be  liable  to  a  penalty  up  to  thrice  the  sum  involved  in  such  contravention  where  such 
amount  is  quantifiable,  or up  to  two  lakh  rupees  where the  amount is  not quantifiable, and  where  such 
contravention is a continuing one, further penalty which may extend to five thousand rupees for every day 
after the first day during which the contravention continues. 

1[(1A) If any person is found to have acquired any foreign exchange, foreign security or immovable 
property,  situated  outside  India,  of  the  aggregate  value  exceeding  the  threshold  prescribed  under  the 
proviso  to  sub-section  (1)  of  section  37A,  he  shall  be  liable  to  a  penalty  up  to  three  times  the  sum 
involved  in  such  contravention  and  confiscation  of  the  value  equivalent,  situated  in  India,  the  Foreign 
exchange, foreign security or immovable property. 

1. Ins. by Act 20 of 2015, s. 140 (w.e.f. 9-9-2015). 

9 

 
                                                           
(1B) If the Adjudicating Authority, in a proceeding under sub-section (1A) deems fits, he may, after 
recording  the  reasons  in  writing,  recommend  for  the  initiation  of prosecution  and  if  the  Director  of 
Enforcement is satisfied, he may, after recording the reasons in writing, may direct prosecution by filing a 
Criminal Complaint against the guilty person by an officer not below the rank of Assistant Director. 

(1C)  If  any  person  is  found  to  have  acquired any  foreign  exchange,  foreign  security  or  immovable 
property,  situated  outside  India,  of  the  aggregate  value  exceeding  the  threshold  prescribed  under  the 
proviso  to  sub-section  (1)  of  section  37A,  he  shall  be,  in  addition  to  the  penalty  imposed  under                   
sub-section (1A), punishable with imprisonment for a term which may extend to five years and with fine. 

(1D) No court shall take cognizance of an offence under sub-section (1C) of section 13 except as on 

complaint  in  writing  by  an  officer  not  below  the  rank  of  Assistant  Director  referred  to  in                               
sub-section (1B).] 

(2) Any Adjudicating Authority adjudging any contravention under sub-section (1), may, if he thinks 
fit  in  addition  to  any  penalty  which  he  may  impose  for  such  contravention  direct  that  any  currency, 
security  or  any  other  money  or  property  in respect  of  which  the  contravention has taken  place  shall  be 
confiscated to the Central Government and further direct that the foreign exchange holdings, if any, of the 
persons  committing  the  contraventions  or  any  part thereof,  shall  be brought back  into  India  or shall  be 
retained outside India in accordance with the directions made in this behalf.  

Explanation.—For the purposes of this sub-section, “property” in respect of which contravention has 

taken place, shall include— 

(a) deposits in a bank, where the said property is converted into such deposits;  

(b) Indian currency, where the said property is converted into that currency; and  

(c) any other property which has resulted out of the conversion of that property.  

14.  Enforcement  of  the  orders  of  Adjudicating  Authority.—(1)  Subject  to  the  provisions  of                 

sub-section  (2)  of  section  19,  if  any  person  fails  to  make  full  payment  of  the  penalty  imposed  on  him 
under section 13 within a period of ninety days from the date on which the notice for payment of such 
penalty is served on him, he shall be liable to civil imprisonment under this section.  

(2)  No  order  for  the  arrest  and  detention  in  civil  prison  of  a  defaulter  shall  be  made  unless  the 
Adjudicating  Authority  has  issued  and  served  a  notice  upon  the  defaulter  calling  upon  him  to  appear 
before him on the date specified in the notice and to show cause why he should not be committed to the 
civil prison, and unless the Adjudicating Authority, for reasons in writing, is satisfied— 

(a) that the defaulter, with the object or effect of obstructing the recovery of penalty, has after the 
issue of notice by the Adjudicating Authority, dishonestly transferred, concealed, or removed any part 
of his property, or 

(b) that the defaulter has, or has had since the issuing of notice by the Adjudicating Authority, the 
means  to  pay  the  arrears  or  some  substantial  part  thereof  and  refuses  or  neglects  or  has  refused  or 
neglected to pay the same.  

(3)  Notwithstanding  anything  contained  in  sub-section  (1),  a  warrant  for  the  arrest  of  the  defaulter 
may  be  issued  by  the  Adjudicating  Authority  if  the  Adjudicating  Authority  is  satisfied,  by  affidavit  or 
otherwise, that with the object or effect of delaying the execution of the certificate the defaulter is likely 
to abscond or leave the local limits of the jurisdiction of the Adjudicating Authority. 

(4) Where appearance is not made pursuant to a notice issued and served under sub-section (1), the 

Adjudicating Authority may issue a warrant for the arrest of the defaulter.  

(5) A warrant of arrest issued by the Adjudicating Authority under sub-section (3) or sub-section (4) 
may also be executed by any other Adjudicating Authority within whose jurisdiction the defaulter may for 
the time being be found.  

(6)  Every  person  arrested  in  pursuance  of  a  warrant  of  arrest  under  this  section  shall  be  brought 
before  the  Adjudicating  Authority  issuing  the  warrant  as  soon  as  practicable  and  in  any  event  within 
twenty-four hours of his arrest (exclusive of the time required for the journey): 

10 

 
Provided that, if the defaulter pays the amount entered in the warrant of arrest as due and the costs of 

the arrest to the officer arresting him, such officer shall at once release him. 

Explanation.—For the purposes of this sub-section, where the defaulter is a Hindu undivided family, 

the karta thereof shall be deemed to be the defaulter. 

(7) When a defaulter appears before the Adjudicating Authority pursuant to a notice to show cause or 
is brought before the Adjudicating Authority under this section, the Adjudicating Authority shall give the 
defaulter an opportunity showing cause why he should not be committed to the civil prison.  

(8) Pending the conclusion of the inquiry, the Adjudicating Authority may, in his discretion, order the 
defaulter  to  be  detained  in  the  custody  of  such  officer  as  the  Adjudicating  Authority  may  think  fit  or 
release  him  on  his  furnishing  the  security  to  the  satisfaction  of  the  Adjudicating  Authority  for  his 
appearance as and when required.  

(9)  Upon  the  conclusion  of  the  inquiry,  the  Adjudicating  Authority  may  make  an  order  for  the 
detention of the defaulter in the civil prison and shall in that event cause him to be arrested if he is not 
already under arrest:  

Provided  that in  order  to  give  a  defaulter  an  opportunity  of  satisfying  the  arrears,  the  Adjudicating 
Authority  may,  before  making  the  order  of  detention,  leave  the  defaulter  in  the  custody  of  the  officer 
arresting him or of any other officer for a specified period not exceeding fifteen days, or release him on 
his  furnishing  security  to  the  satisfaction  of  the  Adjudicating  Authority  for  his  appearance  at  the 
expiration of the specified period if the arrears are not satisfied.  

(10) When the Adjudicating Authority does not make an order of detention under sub-section (9), he 

shall, if the defaulter is under arrest, direct his release.  

(11) Every person detained in the civil prison in execution of the certificate may be so detained,— 

(a)  where the  certificate  is  for  a  demand  of an amount  exceeding rupees  one crore,  up to three 

years, and  

(b) in any other case, up to six months:  

Provided that he shall be released from such detention on the amount mentioned in the warrant for his 

detention being paid to the officer-in-charge of the civil prison. 

(12) A defaulter released from detention under this section shall not, merely by reason of his release, 
be  discharged  from  his  liability  for  the  arrears,  but  he  shall  not  be  liable  to  be  arrested  under  the 
certificate in execution of which he was detained in the civil prison. 

(13) A detention order may be executed at any place in India in the manner provided for the execution 

of warrant of arrest under the Code of Criminal Procedure, 1973 (2 of 1974).  

1[14A.  Power  of  recover  arrears  of  penalty.—(1)  Save  as  otherwise  provided  in  this  Act,  the 
Adjudicating Authority may, by order in writing, authorise an officer of Enforcement not below the rank 
of Assistant Director to recover any arrears of penalty from any person who fails to make full payment of 
penalty  imposed  on  him  under  section  13  within the  period  of  ninety  days  from  the  date  on  which  the 
notice for payment of such penalty is served on him. 

(2) The officer referred to in sub-section (1) shall exercise all the like powers which are conferred on 
the income-tax authority in relation to recovery of tax under the Income-tax Act, 1961 (43 of 1961) and 
the  procedure  laid  down  under  the  Second  Schedule  to  the  said  Act  shall  mutatis  mutandis  apply  in 
relation to recovery of arrears of penalty under this Act.] 

15.  Power  to  compound  contravention.—(1)  Any  contravention  under  section  13  may,  on  an 
application made by the person committing such contravention, be compounded within one hundred and 
eighty days from the date of receipt of application by the Director of Enforcement or such other officers 
of the Directorate of Enforcement and officers of the Reserve Bank as may be authorised in this behalf by 
the Central Government in such manner as may be prescribed.  

1. Section 14A shall stand inserted (date to be notified) by Act 28 of 2016, s. 229. 

11 

 
                                                           
(2)  Where  a  contravention  has  been  compounded  under  sub-section  (1),  no  proceeding  or  further 
proceeding,  as  the  case  may  be,  shall  be  initiated  or  continued,  as  the  case  may  be,  against  the  person 
committing such contravention under that section, in respect of the contravention so compounded.  

CHAPTER V 

ADJUDICATION AND APPEAL 

16.  Appointment  of  Adjudicating  Authority.—(1)  For  the  purpose  of  adjudication  under              

section 13, the Central Government may, by an order published in the Official Gazette, appoint as many 
officers  of  the  Central  Government  as  it  may  think  fit,  as  the  Adjudicating  Authorities  for  holding  an 
inquiry in the manner prescribed after giving the person alleged to have committed contravention under 
section  13,  against  whom  a  complaint  has  been  made  under  sub-section  (3)  (hereinafter  in  this  section 
referred to as the said person) a reasonable opportunity of being heard for the purpose of imposing any 
penalty: 

Provided that where the Adjudicating Authority is of opinion that the said person is likely to abscond 
or  is  likely  to  evade  in  any  manner,  the  payment  of  penalty,  if  levied,  it  may  direct  the  said  person  to 
furnish a bond or guarantee for such amount and subject to such conditions as it may deem fit. 

(2)  The  Central  Government  shall,  while  appointing 

the  Adjudicating  Authorities  under                         

sub-section (1), also specify in the order published in the Official Gazette, their respective jurisdictions. 

(3) No Adjudicating Authority shall hold an enquiry under sub-section (1) except upon a complaint in 

writing made by any officer authorised by a general or special order by the Central Government.  

(4)  The  said  person  may  appear  either  in  person  or  take  the  assistance  of  a  legal  practitioner  or  a 

chartered accountant of his choice for presenting his case before the Adjudicating Authority.  

(5) Every Adjudicating Authority shall have the same powers of a civil court which are conferred on 

the Appellate Tribunal under sub-section (2) of section 28 and— 

(a)  all  proceedings  before  it  shall  be  deemed  to  be  judicial  proceedings  within  the  meaning  of 

sections 193 and 228 of the Indian Penal Code (45 of 1860);  

(b) shall be deemed to be a civil court for the purposes of sections 345 and 346 of the Code of 

Criminal Procedure, 1973 (2 of 1974). 

(6) Every Adjudicating Authority shall deal with the complaint under sub-section (2) as expeditiously 
as possible and endeavour shall be made to dispose of the complaint finally within one year from the date 
of receipt of the complaint:  

Provided  that  where  the  complaint  cannot  be  disposed  of  within  the  said  period,  the  Adjudicating 
Authority  shall  record  periodically  the  reasons in  writing  for  not  disposing  of  the  complaint  within  the 
said period. 

17.  Appeal  to  Special  Director  (Appeals).—(1)  The  Central  Government  shall,  by  notification, 
appoint one or more Special Directors (Appeals) to hear appeals against the orders of the Adjudicating 
Authorities  under  this  section  and  shall  also  specify  in  the  said  notification  the  matter  and  places  in 
relation to which the Special Director (Appeals) may exercise jurisdiction. 

(2)  Any  person  aggrieved  by  an  order  made  by  the  Adjudicating  Authority,  being  an  Assistant 
Director  of  Enforcement  or  a  Deputy  Director  of  Enforcement,  may  prefer  an  appeal  to  the  Special 
Director (Appeals). 

(3) Every appeal under sub-section (1) shall be filed within forty-five days from the date on which the 
copy of the order made by the Adjudicating Authority is received by the aggrieved person and it shall be 
in such form, verified in such manner and be accompanied by such fee as may be prescribed: 

Provided  that  the  Special  Director  (Appeals)  may  entertain  an  appeal  after  the  expiry  of  the  said 
period  of  forty-five  days,  if  he  is  satisfied  that  there  was  sufficient  cause  for  not  filing  it  within  that 
period.  

(4) On receipt of an appeal under sub-section (1), the Special Director (Appeals) may after giving the 
parties to the appeal an opportunity of being heard, pass such order thereon as he thinks fit, confirming, 
modifying or setting aside the order appealed against. 

12 

 
(5) The  Special  Director  (Appeals)  shall  send a  copy  of  every  order  made  by  him  to  the  parties  to 

appeal and to the concerned Adjudicating Authority. 

(6) The Special Director (Appeals) shall have the same powers of a civil court which are conferred on 

the Appellate Tribunal under sub-section (2) of section 28 and— 

(a) all proceedings before him shall be deemed to be judicial proceedings within the meaning of 

sections 193 and 228 of the Indian Penal Code (45 of 1860);  

(b) shall be deemed to be a civil court for the purposes of sections 345 and 346 of the Code of 

Criminal Procedure, 1973 (2 of 1974).  
1[18. Appellate Tribunal.—The Appellate Tribunal constituted under sub-section (1) of section 12 of 
the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (13 of 1976), shall, 
on and from the commencement of Part XIV of Chapter VI of the Finance Act, 2017 (7 of 2017), be the 
Appellate  Tribunal  for  the  purposes  of  this  Act  and  the  said  Appellate  Tribunal  shall  exercise  the 
jurisdiction, powers and authority conferred on it by or under this Act.] 

19. Appeal to Appellate Tribunal—(1) Save as provided in sub-section (2), the Central Government 
or any person aggrieved by an order made by an Adjudicating Authority, other than those referred to in 
sub-section (1)  of  section 17,  or  the  Special  Director  (Appeals),  may  prefer  an  appeal  to  the  Appellate 
Tribunal: 

Provided  that  any  person  appealing  against  the  order  of  the  Adjudicating  Authority  or  the  Special 
Director (Appeals) levying any penalty, shall while filing the appeal, deposit the amount of such penalty 
with such authority as may be notified by the Central Government:  

Provided further that where in any particular case, the Appellate Tribunal is of the opinion that the 
deposit of such penalty would cause undue hardship to such person, the Appellate Tribunal may dispense 
with such deposit subject to such conditions as it may deem fit to impose so as to safeguard the realisation 
of penalty. 

(2) Every appeal under sub-section (1) shall be filed within a period of forty-five days from the date 
on  which a  copy  of the  order  made  by  the  Adjudicating  Authority  or the  Special  Director  (Appeals) is 
received by the aggrieved person or by the Central Government and  it shall be in such form, verified in 
such manner and be accompanied by such fee as may be prescribed:  

Provided  that the  Appellate  Tribunal  may  entertain  an  appeal  after  the  expiry  of  the  said  period  of 

forty-five days if it is satisfied that there was sufficient cause for not filing it within that period. 

(3) On receipt of an appeal under sub-section (1), the Appellate Tribunal may, after giving the parties 
to  the  appeal  an  opportunity  of  being  heard,  pass  such  orders  thereon  as  it  thinks  fit,  confirming, 
modifying or setting aside the order appealed against.  

(4) The Appellate Tribunal shall send a copy of every order made by it to the parties to the appeal and 

to the concerned Adjudicating Authority or the Special Director (Appeals), as the case may be. 

(5) The appeal filed before the Appellate Tribunal under sub-section (1) shall be dealt with by it as 
expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within one 
hundred and eighty days from the date of receipt of the appeal: 

Provided that where any appeal could not be disposed of within the said period of one hundred and 
eighty  days,  the  Appellate  Tribunal  shall  record  its  reasons  in  writing  for  not  disposing  off  the  appeal 
within the said period.  

(6) The Appellate Tribunal may, for the purpose of examining the legality, propriety or correctness of 
any order made by the Adjudicating Authority under section 16 in relation to any proceeding, on its own 
motion or otherwise, call for the records of such proceedings and make such order in the case as it thinks 
fit. 

20.  [Composition  of  Appellate  Tribunal.]  Omitted  by  the  finance  Act,  2017  (7  of  2017),  s.  165  

(w.e.f. 26-5-2017). 

1. Subs. by Act 7 of 2017, s. 165, for section 18 (w.e.f. 26-5-2017). 

13 

 
                                                           
 1[21.  Qualifications,  for  appointment  of  Special  Director  (Appeals).—A  person  shall  not  be 

qualified for appointment as a Special Director (Appeals) unless he—  

(a) has been a member of the Indian Legal Service and has held a post in Grade I of that Service; or  

(b)  has  been  a  member  of  the  Indian  Revenue  Service  and  has  held  a  post  equivalent  to  a  Joint 

Secretary to the Government of India.] 

 22. [Term of office.] Omitted by the Finance Act, 2017 (7 of 2017), s. 165 (w.e.f. 26-5-2017). 
2[23.  Terms  and  Condition  of  service  of  Special  Director  of  (Appeals).—The  salary  and 
allowances  payable  to  and  the  other  terms  and  conditions  of  service  of  the  Special  Director  (Appeals) 
shall be such as may be prescribed.] 

24. [Vacancies.] Omitted by the Finance Act, 2017 (7 of 2017), s. 165 (w.e.f. 26-5-2017). 

25. [Resignation and removal.] Omitted by s. 165, ibid. (w.e.f. 26-5-2017). 

26.  [Member  to  act  as  Chairperson  in  certain  circumstances.]  Omitted  by  s.  165,  ibid.                

(w.e.f. 26-5-2017). 

3[27. Staff of Special Director (Appeal).—(1) The Central Government shall provide the office of 

the Special Director (Appeals) with such officers and employees as it may deem fit. 

(2)  The  officers  and  employees  of  the  office  of  the  Special  Director  (Appeals)  shall  discharge  their 

functions under the general superintendence of the Special Director (Appeals). 

(3)  The  salaries  and  allowances  and  other  terms  and  conditions  of  service  of  the  officers  and 

employees of the office of the Special Director (Appeals) shall be such as may be prescribed.] 

28.  Procedure  and  powers  of  Appellate  Tribunal  and  Special  Director  (Appeals).—(1)  The 
Appellate Tribunal and the Special Director (Appeals) shall not be bound by the procedure laid down by 
the Code of Civil Procedure, 1908 (5 of 1908), but shall be guided by the principles of natural justice and, 
subject to the other provisions of this Act, the Appellate Tribunal and the Special Director (Appeals) shall 
have powers to regulate its own procedure. 

(2)  The  Appellate  Tribunal  and  the  Special  Director  (Appeals)  shall  have,  for  the  purposes  of 
discharging its functions under this Act, the same powers as are vested in a civil court under the Code of 
Civil Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following matters, namely:— 

(a) summoning and enforcing the attendance of any person and examining him on oath;  

(b) requiring the discovery and production of documents;  

(c) receiving evidence on affidavits;  

   (d)  subject  to  the  provisions  of  sections  123  and  124  of  the  Indian  Evidence  Act,                              

1872 (1 of 1872), requisitioning any public record or document or copy of such record or document 
from any office;  

(e) issuing commissions for the examination of witnesses or documents;  

(f) reviewing its decisions;  

(g) dismissing a representation of default or deciding it ex parte;  

(h) setting aside any order of dismissal of any representation for default or any order passed by it 

ex parte; and  

(i) any other matter which may be prescribed by the Central Government.  

(3) An order made by the Appellate Tribunal or the Special Director (Appeals) under this Act shall be 
executable by the Appellate Tribunal or the Special Director (Appeals) as a decree of civil court and, for 

1. Subs. by Act 7 of 2017, s. 165, for section 21 (w.e.f. 26-5-2017). 
2. Subs. by s. 165, ibid., for section 23 (w.e.f. 26-5-2017). 
3. Subs. by s. 165, ibid., for section 27 (w.e.f. 26-5-2017). 

14 

 
                                                           
this purpose, the Appellate Tribunal and the Special Director (Appeals) shall have all the powers of a civil 
court. 

(4)  Notwithstanding  anything  contained  in  sub-section  (3),  the  Appellate  Tribunal  or  the  Special 
Director (Appeals) may transmit any order made by it to a civil court having local jurisdiction and such 
civil court shall execute the order as if it were a decree made by that court. 

(5) All proceedings before the Appellate Tribunal and the Special Director (Appeals) shall be deemed 

judicial  proceedings  within 

to  be 
Penal Code (45 of 1860) and the Appellate Tribunal shall be deemed to be a civil court for the purposes 
of sections 345 and 346 of the Code of Criminal Procedure, 1973 (2 of 1974). 

the  meaning  of  sections  193  and  228  of 

the  Indian                                        

29.  [Distribution  of  business  amongst  Benches.]  Omitted  by  the  Finance  Act,  2017  (7  of  2017),      

s. 165 (w.e.f. 26-5-2017). 

30. [Power of Chairperson to transfer cases.] Omitted by s. 165, ibid. (w.e.f. 26-5-2017). 

31. [Decision to be by majority.] Omitted by s. 165, ibid. (w.e.f. 26-5-2017). 

32.  Right  of  appellant  to  take  assistance  of  legal  practitioner  or  chartered  accountant  and  of 
Government,  to  appoint  presenting  officers.—(1)  A  person  preferring  an  appeal  to  the  1[Special 
Director  (Appeals)]  under  this  Act  may  either  appear  in  person  or  take  the  assistance  of  a  legal 
practitioner  or  a  chartered  accountant  of  his  choice  to  present  his  case  before  the  2[Special  Director 
(Appeals)]. 

(2) The Central Government may authorise one or more legal practitioners or chartered accountants 
or  any  of  its  officers  to  act  as  presenting  officers  and  every  person  so authorised  may  present  the  case 
with respect to any appeal before the 2[Special Director (Appeals)]. 

3[33. Officers and employees etc., to be public servant. — The Adjudicating Authority, Competent 
Authority  and  the  Special  Director  (Appeals)  and  other  officers  and  employees  of  the  Special  Director 
(Appeals)  shall  be  deemed  to  be  public  servants  within  the  meaning  of  section  21  of  the  Indian  Penal 
Code, 1860 (45 of 1860).] 

34. Civil court not to have jurisdiction.—No civil court shall have jurisdiction to entertain any suit 
or proceeding in respect of any matter which an Adjudicating Authority or the Appellate Tribunal or the 
Special  Director  (Appeals)  is  empowered  by  or  under  this  Act  to  determine  and  no  injunction  shall  be 
granted by any court or other authority in respect of any action taken or to be taken in pursuance of any 
power conferred by or under this Act. 

35.  Appeal  to  High  Court.—Any  person  aggrieved  by  any  decision  or  order  of  the  Appellate 
Tribunal may file an appeal to the High Court within sixty days from the date of communication of the 
decision or order of the Appellate Tribunal to him on any question of law arising out of such order: 

Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause 
from  filing  the appeal  within  the  said  period, allow  it  to  be filed  within a  further  period not exceeding 
sixty days. 

Explanation.—In this section “High Court” means— 

(a)  the  High  Court  within  the  jurisdiction  of  which  the  aggrieved  party  ordinarily  resides  or 

carries on business or personally works for gain; and  

1. Subs by Act 7 of 2017, s. 165, for “Appellate Tribunal or the Special Director (Appeals” (w.e.f. 26-5-2017). 
2. Subs. by s. 165, ibid., for “Appellate Tribunal or the Special Director (Appeals), as the case may be” (w.e.f. 26-5-2017). 
3. Subs. by s. 165, ibid., for section 33 (w.e.f. 26-5-2017). 

15 

 
                                                           
 
(b) where the Central Government is the aggrieved party, the High Court within the jurisdiction 
of  which  the  respondent,  or  in  a  case  where  there  are  more  than  one  respondent,  any  of  the 
respondents, ordinarily resides or carries on business or personally works for gain.  

CHAPTER VI 

DIRECTORATE OF ENFORCEMENT 

36.  Directorate  of  Enforcement.—(1)  The  Central  Government  shall  establish  a  Directorate  of 
Enforcement with a Director and such other officers or class of officers as it thinks fit, who shall be called 
officers of Enforcement, for the purposes of this Act. 

(2) Without prejudice to the provisions of sub-section (1), the Central Government may authorise the 
Director of Enforcement or an Additional Director of Enforcement or a Special Director of Enforcement 
or a Deputy Director of Enforcement to appoint officers of Enforcement below the rank of an Assistant 
Director of Enforcement. 

(3) Subject to such conditions and limitations as the Central Government may impose, an officer of 
Enforcement may exercise the powers and discharge the duties conferred or imposed on him under this 
Act. 

37.  Power  of  search,  seizure,  etc.—(1)  The  Director  of  Enforcement  and  other  officers  of 
Enforcement, not below the rank of an Assistant Director, shall take up for investigation the contravention 
referred to in section 13. 

(2)  Without  prejudice  to  the  provisions  of  sub-section  (1),  the  Central  Government  may  also,  by 
notification, authorise any officer or class of officers in the Central Government, State Government or the 
Reserve Bank, not below the rank of an Under Secretary to the Government of India to investigate any 
contravention referred to in section 13.  

(3) The officers referred to in sub-section (1) shall exercise the like powers which are conferred on 
income-tax  authorities  under  the  Income-tax  Act,  1961  (43  of  1961)  and  shall  exercise  such  powers, 
subject to such limitations laid down under that Act. 

1[37A. Special  provisions  relating  to  assets  held  outside  India 

in  contravention  of                             

section 4.—(1) Upon receipt of any information or otherwise, if the Authorised Officer prescribed by the 
Central Government has reason to believe that any foreign exchange, foreign security, or any immovable 
property, situated outside India, is suspected to have been held in contravention of section 4, he may after 
recording the reasons in writing, by an order, seize value equivalent, situated within India, of such foreign 
exchange, foreign security or immovable property: 

Provided  that  no  such  seizure  shall  be  made  in  case  where  the  aggregate  value  of  such  foreign 
exchange,  foreign  security  or  any  immovable  property,  situated  outside  India,  is  less  than  the  value  as 
may be prescribed. 

(2) The order of seizure along with relevant material shall be placed before the Competent Authority, 
appointed by the Central Government, who shall be an officer not below the rank of Joint Secretary to the 
Government  of  India  by  the  Authorised  Officer  within  a  period  of  thirty  days  from  the  date  of  such 
seizure. 

(3) The Competent Authority shall dispose of the petition within a period of one hundred eighty days 
from the date of seizure by either confirming or by setting aside such order, after giving an opportunity of 
being heard to the representatives of the Directorate of Enforcement and the aggrieved person. 

Explanation.—While computing the period of one hundred eighty days, the period of stay granted by 
court  shall  be  excluded  and  a  further  period  of  at  least  thirty  days  shall  be  granted  from  the  date  of 
communication of vacation of such stay order. 

(4) The order of the Competent Authority confirming seizure of equivalent asset shall continue till the 
disposal  of  adjudication  proceedings  and  thereafter,  the  Adjudicating  Authority  shall  pass  appropriate 
directions  in  the  adjudication  order  with  regard  to  further  action  as  regards  the  seizure  made  under                
sub-section (1): 

1.  Ins. by Act 20 of 2015, s. 142 (w.e.f. 9-9-2015). 

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Provided that  if,  at  any  stage  of  the proceedings  under  this  Act, the aggrieved  person  discloses  the 
fact  of  such  foreign  exchange,  foreign  security  or  immovable  property  and  brings  back  the  same  into 
India, then the Competent Authority or the Adjudicating Authority, as the case may be, on receipt of an 
application in this regard from the aggrieved person, and after affording an opportunity of being heard to 
the  aggrieved  person  and  representatives  of  the  Directorate  of  Enforcement,  shall  pass  an  appropriate 
order as it deems fit, including setting aside of the seizure made under sub-section (1). 

(5) Any person aggrieved by any order passed by the Competent Authority may prefer an appeal to 

the Appellate Tribunal. 

(6) Nothing contained in section 15 shall apply to this section.] 

38.  Empowering  other  officers.—(1) The  Central  Government  may,  by  order and  subject  to  such 
conditions and limitations as it thinks fit to impose, authorise any officer of customs or any central excise 
officer  or  any  police  officer  or  any  other  officer  of  the  Central  Government  or  a  State  Government  to 
exercise such of the powers and discharge such of the duties of the Director of Enforcement or any other 
officer of Enforcement under this Act as may be stated in the order. 

(2) The officers referred to in sub-section (1) shall exercise the like powers which are conferred on 
the income-tax authorities under the Income-tax Act, 1961 (43 of 1961), subject to such conditions and 
limitations as the Central Government may impose. 

CHAPTER VII 

MISCELLANEOUS 

39. Presumption as to documents in certain cases.—Where any document— 

(i) is produced or furnished by any person or has been seized from the custody or control of any 

person, in either case, under this Act or under any other law; or  

(ii)  has  been  received  from  any  place  outside  India  (duly  authenticated  by  such  authority  or 
person and in such manner as may be prescribed) in the course of investigation of any contravention 
under this Act alleged to have been committed by any person,  

and such document is tendered in any proceeding under this Act in evidence against him, or against him 
and any other person who is proceeded against jointly with him, the court or the Adjudicating Authority, 
as the case may be, shall— 

(a)  presume,  unless  the  contrary  is  proved,  that  the  signature  and  every  other  part  of  such 
document which purports to be in the handwriting of any particular person or which the court may 
reasonably assume to have been signed by, or to be in the handwriting of, any particular person, is in 
that person’s handwriting, and in the case of a document executed or attested, that it was executed or 
attested by the person by whom it purports to have been so executed or attested; 

(b) admit the document in evidence notwithstanding that it is not duly stamped, if such document 

is otherwise admissible in evidence;  

(c) in a case falling under clause (i), also presume, unless the contrary is proved, the truth of the 

contents of such document. 

40.  Suspension  of  operation  of  this  Act.—(1)  If  the  Central  Government  is  satisfied  that 
circumstances  have  arisen rendering  it  necessary  that  any  permission  granted  or  restriction  imposed  by 
this Act should cease to be granted or imposed, or if it considers necessary or expedient so to do in public 
interest, the Central Government may, by notification, suspend or relax to such extent either indefinitely 
or for such period as may be notified, the operation of all or any of the provisions of this Act. 

(2)  Where  the  operation  of  any  provision  of  this  Act  has  under  sub-section  (1)  been  suspended  or 
relaxed indefinitely, such suspension or relaxation may, at any time while this Act remains in force, be 
removed by the Central Government by notification. 

(3)  Every  notification  issued  under  this  section  shall  be  laid,  as  soon  as  may  be  after  it  is  issued, 
before  each  House  of  Parliament,  while  it  is  in  session,  for  a  total  period  of  thirty  days  which  may  be 
comprised in one session or in two or more successive sessions, and if, before the expiry of the session 

17 

 
immediately following the session or the successive sessions aforesaid, both Houses agree in making any 
modification  in  the  notification  or  both  Houses  agree  that  the  notification  should  not  be  issued,  the 
notification shall thereafter have effect only in such modified form or be of no effect, as the case may be; 
so,  however,  that  any  such  modification  or  annulment  shall  be  without  prejudice  to  the  validity  of 
anything previously done under that notification. 

41. Power of  Central  Government to  give  directions.—For the purposes  of  this  Act, the  Central 
Government  may,  from  time  to  time,  give  to  the  Reserve  Bank  such  general  or  special  directions  as  it 
thinks fit, and the Reserve Bank shall, in the discharge of its functions under this Act, comply with any 
such directions. 

42.  Contravention  by  companies.—(1)  Where  a  person committing  a  contravention  of any  of  the 
provisions of this Act or of any rule, direction or order made thereunder is a company, every person who, 
at the time the contravention was committed, was in charge of, and was responsible to, the company for 
the conduct of the business of the company as well as the company, shall be deemed to be guilty of the 
contravention and shall be liable to be proceeded against and punished accordingly: 

Provided that nothing contained in this sub-section shall render any such person liable to punishment 
if he proves that the contravention took place without his knowledge or that he exercised due diligence to 
prevent such contravention. 

(2)  Notwithstanding  anything  contained  in  sub-section  (1),  where  a  contravention  of  any  of  the 
provisions  of  this  Act  or  of  any  rule,  direction  or  order  made  thereunder  has  been  committed  by  a 
company and it is proved that the contravention has taken place with the consent or connivance of, or is 
attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, 
such director, manager, secretary or other officer shall also be deemed to be guilty of the contravention 
and shall be liable to be proceeded against and punished accordingly. 

Explanation.—For the purposes of this section— 

(i) “company” means any body corporate and includes a firm or other association of individuals; 

and  

(ii) “director”, in relation to a firm, means a partner in the firm.  

43.  Death  or  insolvency  in  certain  cases.—Any  right,  obligation,  liability,  proceeding  or  appeal 
arising in relation to the provisions of section 13 shall not abate by reason of death or insolvency of the 
person  liable  under  that  section  and  upon  such  death  or  insolvency  such  rights  and  obligations  shall 
devolve on the legal representative of such person or the official receiver or the official assignee, as the 
case may be: 

Provided that a legal representative of the deceased shall be liable only to the extent of the inheritance 

or estate of the deceased. 

44. Bar of legal proceedings.—No suit, prosecution or other legal proceeding shall lie against the 
Central Government or the Reserve Bank or any officer of that Government or of the Reserve Bank or 
any other person exercising any power or discharging any functions or performing any duties under this 
Act,  for  anything  in  good  faith  done  or  intended  to  be  done  under  this  Act  or  any  rule,  regulation, 
notification, direction or order made thereunder. 

1[44A.  Powers  of  Reserve  Bank  not  to  apply  to  International  Financial  Services  Centre.— 
Notwithstanding anything contained in any other law for the time being in force, the  powers exercisable 
by the Reserve Bank under this Act,— 

(a) shall not extend to an International Financial Services Centre set up under sub-section (1) of 

section 18 of the Special Economic Zones Act, 2005 (28 of 2005); 

(b)  shall  be  exercisable  by  the  International  Financial  Services  Centres  Authority  established 
under sub-section (1) of section 4 of the International Financial Services Centres Authority Act, 2019, 
in  so  far  as  regulation  of  financial  products,  financial  services  and  financial  institutions  that  are 
permitted in the International Financial Services Centres are concerned.] 

1. Ins. by Act 50 of 2019, s. 33 and the second Schedule (w.e.f. 1-10-2020). 

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45. Removal of difficulties.—(1) If any difficulty arises in giving effect to the provisions of this Act, 
the Central Government may, by order, do anything not inconsistent with the provisions of this Act for 
the purpose of removing the difficulty: 

Provided that no such order shall be made under this section after the expiry of two years from the 

commencement of this Act. 

(2) Every order made under this section shall be laid, as soon as may be after it is made, before each 

House of Parliament. 

46. Power to make rules.—(1) The Central Government  may, by notification, make rules to carry 

out the provisions of this Act. 

(2) Without prejudice to the generality of the foregoing power, such rules may provide for,— 

(a) the imposition of reasonable restrictions on current account transactions under section 5;  
1[(aa)  the  instruments  which  are  determined  to  be  debt  instruments  under  sub-section  (7)  of             

section 6; 

(ab) 

the  permissible  classes  of  capital  account 

transactions 

in  accordance  with                                

sub-section  (2A)  of  section  6,  the  limits  of  admissibility  of  foreign  exchange,  and  the  prohibition, 
restriction or regulation of such transactions;] 

(b)  the  manner  in  which  the  contravention  may  be  compounded  under  sub-section  (1)  of                 

section 15;  

(c)  the  manner  of  holding  an  inquiry  by  the  Adjudicating  Authority  under  sub-section  (1)  of   

section 16;  

(d) the form of appeal and fee for filing such appeal under sections 17 and 19;  

(e)  the  salary  and  allowances  payable  to  and  the  other  terms  and  conditions  of  service  of  the 

2[Special Director (Appeals)] under section 23;  

(f) the salaries and allowances and other conditions of service of the officers and employees of the 

3[office of the Special Director (Appeals)] under sub-section (3) of section 27;  

(g)  the  additional  matters  in  respect  of  which  the  Appellate  Tribunal  and  the  Special  Director 

(Appeals) may exercise the powers of a civil court under clause (i) of sub-section (2) of section 28;  
4[(gg) the aggregate value of foreign exchange referred to in sub-section (1) of section 37A;] 

(h)  the  authority  or  person  and  the  manner  in  which  any  document  may  be  authenticated  under 

clause (ii) of section 39; and  

(i) any other matter which is required to be, or may be, prescribed.  

47. Power to make regulations.—(1) The Reserve Bank may, by notification, make regulations to 

carry out the provisions of this Act and the rules made thereunder. 

(2) Without prejudice to the generality of the foregoing power, such regulations may provide for,— 

5[(a)  the  permissible  classes  of  capital  account  transactions  involving  debt  instruments 
determined under sub-section (7) of section 6, the limits of admissibility of foreign exchange for such 
transactions, and the prohibition, restriction or regulation of such capital account  transactions under 
section 6;]  

(b)  the  manner  and  the  form  in  which  the  declaration  is  to  be  furnished  under  clause  (a)  of        

sub-section (1) of section 7;  

1. Ins. by Act 20 of 2015, s. 143 (w.e.f. 15-10-2019). 

        2. Subs. by Act 7 of 2017, s. 165, for “Chairperson and other Member of the Appellate Tribunal and the Special Director 

(Appeals) (w.e.f. 26-5-2017). 

        3. Subs. by s. 165, ibid., for “Appellate Tribunal and the office of the Special Director (Appeals)” (w.e.f.  26-5-2017). 

4. Ins. by Act 20 of 2015, s. 143 (w.e.f. 15-10-2019). 
5. Subs. by s. 144, ibid., for clause (a) (w.e.f. 15-10-2019). 

19 

 
                                                           
(c) the period within which and the manner of repatriation of foreign exchange under section 8;  

(d)  the  limit  up  to  which  any  person  may  possess  foreign  currency  or  foreign  coins  under            

clause (a) of section 9;  

(e)  the  class  of  persons  and  the  limit  up  to  which  foreign  currency  account  may  be  held  or 

operated under clause (b) of section 9;  

(f)  the  limit  up  to  which  foreign  exchange  acquired  may  be  exempted  under  clause  (d)  of              

section 9;  

(g) the limit up to which foreign exchange acquired may be retained under clause (e) of section 9;  
1[(ga) export, import or holding of currency or currency notes;] 

(h) any other matter which is required to be, or may be, specified.  

2[(3) All regulations made by the Reserve Bank before the date on which the provisions of this section 
are  notified  under  section  6  and  section  47  of  this  Act  on  capital  account  transactions,  the  regulation 
making  power  in  respect  of  which  now  vests  with  the  Central  Government,  shall  continue  to  be  valid, 
until amended or rescinded by the Central Government.] 

48. Rules and regulations to be laid before Parliament.—Every rule and regulation made under this 
Act  shall  be  laid,  as  soon  as  may  be  after  it  is  made,  before  each  House  of  Parliament,  while  it  is  in 
session  for  a  total  period  of  thirty  days  which  may  be  comprised  in  one  session  or  in  two  or  more 
successive  sessions,  and  if,  before  the  expiry  of  the  session  immediately  following  the  session  or  the 
successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation, or 
both Houses agree that the rule or regulation should not be  made, the rule or regulation shall thereafter 
have effect only in such modified form or be of no effect, as the case may be; so, however, that any such 
modification or annulment shall be without prejudice to the validity of anything previously done under 
that rule or regulation. 

49.  Repeal  and  saving.—(1)  The  Foreign  Exchange  Regulation  Act,  1973  (46  of  1973)  is  hereby 
repealed  and  the  Appellate  Board  constituted  under  sub-section  (1)  of  section  52  of  the  said  Act 
(hereinafter referred to as the repealed Act) shall stand dissolved. 

(2) On the dissolution of the said Appellate Board, the person appointed as Chairman of the Appellate 
Board and every other person appointed as Member and holding office as such immediately before such 
date shall vacate their respective offices and no such Chairman or other person shall be entitled to claim 
any compensation for the premature termination of the term of his office or of any contract of service. 

(3) Notwithstanding anything contained in any other law for the time being in force, no court shall take 
cognizance  of  an  offence  under  the  repealed  Act  and  no  adjudicating  officer  shall  take  notice  of  any 
contravention under section 51 of the repealed Act after the expiry of a period of two years from the date 
of the commencement of this Act. 

(4)  Subject  to  the  provisions  of  sub-section  (3)  all  offences  committed  under  the  repealed  Act  shall 

continue to be governed by the provisions of the repealed Act as if that Act had not been repealed.  

(5) Notwithstanding such repeal,— 

(a) anything done or any action taken or purported to have been done or taken including any rule, 
notification,  inspection,  order  or  notice  made  or  issued  or  any  appointment,  confirmation  or 
declaration made or any license, permission, authorization or exemption granted or any document or 
instrument executed or any direction given under the Act hereby repealed shall, in so far as it is not 
inconsistent  with  the  provisions  of  this  Act,  be  deemed  to  have  been  done  or  taken  under  the 
corresponding provisions of this Act;  

(b)  any  appeal  preferred  to  the  Appellate  Board  under  sub-section  (2)  of  section  52  of  the 
repealed Act but not disposed of before the commencement of this Act shall stand transferred to and 
shall disposed of by the Appellate Tribunal constituted under this Act;  

1. Ins. by Act 20 of 2015, s. 144 (w.e.f. 15-10-2019). 
2. Ins. by s. 144. ibid. (w.e.f. 15-10-2019). 

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(c)  every  appeal  from  any  decision  or  order  of  the  Appellate  Board  under  sub-section  (3)  or        

sub-section (4) of section 52 of the repealed Act shall, if not filed before the commencement of this 
Act, be filled before the High Court within a period of sixty days of such commencement:  

Provided that the High Court may entertain such appeal after the expiry of the said period of sixty 
days if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within 
the said period.  

(6)  Save  as  otherwise  provided  in  sub-section  (3),  the  mention  of  particular  matters  in                            

sub-sections (2), (4) and (5) shall not be held to prejudice or affect the general application of section 6 of 
the General Clauses Act, 1897 (10 of 1897) with regard to the effect of repeal. 

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